Indian stocks to open lower on global cues, rate worries: Thursday Market Preview

Worries of the contagion effects from a possible Greek default roiled markets worldwide

The domestic market is likely to open lower ahead of the Reserve Bank of India’s (RBI) policy review and on a sharp sell-off in the global markets. The rate hike will make borrowings for corporate and individuals costlier. Besides the policy review, weekly food inflation numbers for the first week of June will be announced today. For the week ended 28th May, food inflation had jumped to a two-month high of 9.01%.

Among global markets, US stocks finished sharply lower on continuing debt crisis in Greece and a dull picture of the country’s economy. Greece’s woes also pulled Asian indices sharply lower in early trade on Thursday. The SGX Nifty was 65 points down at 5,387.50 compared to its previous close of 5,452.50.

The RBI possible move to cap rising inflation with a 25 basis point rate hike pulled the market lower yesterday. Earlier, the market opened lower, as nervousness took centre-stage ahead of the RBI's policy review. The Sensex started the day 10 points lower at 18,299 and the Nifty opened at 5,494, seven points down from its previous close.

The market was range-bound till mid-morning, after which buying in select stocks lifted it marginally, although the key indices were still negative. The market touched the day's high with the Sensex at 18,309 and the Nifty at 5,499. However, across-the-board selling and key European indices trading in the red pulled the domestic indices southwards in post-noon trade.

The market fell to its intra-day low in the last hour, with the Sensex losing 198 points to 18,111 and the Nifty at 5,439, down 62 points. The benchmarks managed a close above those levels, the Sensex ended at 18,132 a fall of 176 points and the Nifty settled at 5,448, a loss of 53 points.

The Nifty traded below yesterday's closing throughout the session and ended at a 14-day closing low. The index has hit a lower intra-day low and closed below the first support of 5,450. The downtrend will be confirmed if the Nifty hits a lower low and lower close below 5,415. After that it could quickly fall to 5,350 and below. What can reverse the decline is a surprise move by the RBI not to tighten rates.

The US markets tumbled on Wednesday after global rating agency Moody’s Investors Services warned of a downgrade of three largest French banks on account of their exposure in Greek debt or exposure to the Greek economy. Greek bonds were hammered, sending yields on two-year notes to 29%.

Also driving stocks lower were more dismal news on the domestic economy. The index of the Federal Reserve Bank of New York’s Empire State Manufacturing Survey fell below zero for the first time since last November, dropping 20 points from May to -7.79. Separate data showed industrial production rose 0.1%, less than analysts’ forecast for a 0.2% gain. Also, the consumer-price index increased 0.2% in May, figures from the Labor Department showed, the biggest increase since July 2008.

The Dow tumbled 178.84 points (1.48%) to 11,897.27. The S&P 500 declined 22.45 points (1.74%) to 1,265.42 and the Nasdaq Composite fell by 47.26 points (1.76%) to 2,631.46. All three major indices saw their biggest one-day drop since 1st June.

Tracking the crisis in Europe and fall in the US markets overnights, the Asian pack was trading sharply lower in early trade on Thursday. Concerns about the outlook for the US economy and contagion effects from a possible Greek default weighed on the markets across the region.

The Shanghai Composite declined 0.80%, the Hang Seng tanked 1.51%, the Jakarta Composite fell by 0.97%, the KLSE Composite was 0.23% lower, the Nikkei 225 lost 0.84%, the Straits Times fell by 0.89%, the Seoul Composite shrank 1.71% and the
Taiwan Weighted tumbled 1.77%.

Back home, the Securities and Exchange Board of India (SEBI) on Wednesday asked credit rating agencies (CRAs) to adopt standard symbols and definitions devised by it within four months, a move that will help investors to better understand financial health of firms.

Currently, CRAs registered with SEBI use different rating symbols and definitions.

The regulator has devised standard symbols and their definitions for long and short term debt instruments, structured finance instruments and mutual funds schemes. It has been done in consultation with CRAs and in line with international practices.

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DSP Blackrock Investment Managers signs distribution agreement with Shamrao Vithal Co-op Bank

The Shamrao Vithal Co-operative Bank will distribute DSP BlackRock Mutual Fund schemes through its net work of branches spread across the country

DSP BlackRock Investment Managers said that it has signed a distribution agreement with the Shamrao Vithal Co-Operative Bank as part of the strategy to increase their retail presence. The Shamrao Vithal Co-operative Bank will distribute DSP BlackRock Mutual Fund schemes through its net work of branches spread across the country.

Mutual Funds, as an investment avenue are becoming increasingly popular with retail investors. Offering advice on Mutual Funds investments is an extension of the value added services that are offered by banks.

DSP BlackRock Investment Managers is a joint venture between the DSP Group and BlackRock, one of the premier asset management companies in India. The Shamrao Vithal Co-operative Bank was formed in December 1906, by Late Rao Bahadur Shripad Subrao Talmaki.

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Share prices await RBI move for further direction: Wednesday Closing Report

Nifty is headed for 5,350 and below, unless the Reserve Bank of India springs a surprise at its policy review meeting on Thursday

The Reserve Bank of India's (RBI) possible move to cap rising inflation with a 25 basis point rate hike pulled the market lower today.

The market opened lower, as nervousness took centre-stage ahead of the RBI's policy review, due tomorrow. The Sensex started the day 10 points lower at 18,299 and the Nifty opened at 5,494, seven points down from its previous close. Selling was seen in realty, banking, consumer durables and IT stocks, in early trade.

The market was range-bound till mid-morning, after which buying in select stocks lifted it marginally, although the key indices were still negative. The market touched the day's high with the Sensex at 18,309 and the Nifty at 5,499. However, across-the-board selling and key European indices trading in the red, pulled the domestic indices southwards in post-noon trade.

The market fell to its intra-day low in the last hour, with the Sensex losing 198 points to 18,111 and the Nifty at 5,439, down 62 points. The benchmarks managed a close above those levels, the Sensex ended at 18,132 a fall of 176 points and the Nifty settled at 5,448, a loss of 53 points.

The Nifty traded below yesterday's closing throughout the session and ended at a 14-day closing low. The Nifty has hit a lower intra-day low and closed below the first support of 5,450. The downtrend will be confirmed if the Nifty hits a lower low and lower close below 5,415. After that it could quickly fall to 5,350 and below. What can reverse the decline is a surprise move by the RBI not to tighten rates.

The advance-decline ratio on the National Stock Exchange was 475:917.

Among the broader indices, the BSE Mid-cap index declined 0.55% and the BSE Small-cap index fell by 0.59%.

In the sectoral space, BSE Bankex (down 1.58%), BSE Realty (down 1.34%), BSE IT (down 1.25%), BSE Power (down 1.10%) and BSE Consumer Durables (down 1.09%) were the top losers. BSE Fast Moving Consumer Goods (up 0.14%) and BSE Healthcare (up 0.02%) were the only sectoral gainers.

DLF (down 2.80%), Wipro (down 2.78%), State Bank of India (down 2.33%), ICICI Bank (down 2.10%) and Jaiprakash Associates (down 2.02%) ended at the bottom of the Sensex list. Reliance Infrastructure (up 1.46%), Tata Motors (up 0.96%), Hindustan Unilever (up 0.52%), Hero Honda (up 0.20%) and ITC (up 0.13%) were the top performers on the benchmark.



Rain Commodities had announced a sub-division of one equity share of Rs10 each into five equity shares of Rs2 each on 12th May. The record date has been fixed on 16 June 2011. The stock was down 8.17% on the NSE today.

Markets in Asia settled mixed as the Chinese central bank's rate tightening on Tuesday resulted in the Shanghai Composite settling in the red. While stocks in Seoul ended higher, the South Korean central bank said it is open to more rate hikes as prices remain higher. The continuation of the debt crisis in Europe also weighed on investors.

The Jakarta Composite gained 0.56%, the KLSE Composite rose 0.50%, the Nikkei Composite was up 0.28%, the Seoul Composite climbed 0.47% and the Taiwan Weighted added 0.03%. On the other hand, the Shanghai Composite tanked 0.90%, the Hang Seng declined 0.68% and the Straits Times shed 0.08%.

Back home, foreign institutional investors were net sellers of stocks worth Rs798.53 crore on Tuesday. On the other hand, domestic institutional investors were net buyers of shares worth Rs610.72 crore.

The home ministry has given unconditional approval to Reliance Industries (RIL) for the sale of a 30% stake in 23 oil and gas properties, including the Mukesh Ambani-led company's showpiece KG-D6 block, to UK's BP Plc for $7.2 billion. RIL brought in BP to leverage Europe's second biggest firm's expertise in producing oil and gas from deep-sea areas.

RIL has been facing sub-surface technical problems at its eastern offshore KG-D6 fields, where production has fallen from 61.5 million metric standard cubic metres per day (mmscmd) to about 48 mmscmd, far below the targeted 69 mmscmd. The stock fell 1.40% to Rs900.75 per share on the Bombay Stock Exchange (BSE) today.

Following the Supreme Court asking the Central Bureau of Investigation to explain the whereabouts of the Rs200 crore bribe that was allegedly routed to Sun TV in the telecom spectrum allocation scam, CBI sources said they would write to the Enforcement Directorate (ED) to initiate the process to attach the property or equity shares worth Rs200 crore of DB Realty. The DB Realty stock fell 0.67% to Rs74.15 on the BSE.

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